Bramble Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Bramble had used the LIFO method for financial reporting since its inception on January 1, 2018, and had maintained records adequate to apply the FIFO method retrospectively. Bramble concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Income taxes are ignored. Date January 1, 2018 December 31, 2018 December 31, 2019 December 31, 2020 Inventory Determined by LIFO Method $0 100 200 350 FIFO Method $0 8 220 410 Cost of Goods Sold Determined by LIFO Method $0 800 940 1,100 FIFO Method $0 892 828 1,060
Bramble Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Bramble had used the LIFO method for financial reporting since its inception on January 1, 2018, and had maintained records adequate to apply the FIFO method retrospectively. Bramble concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Income taxes are ignored. Date January 1, 2018 December 31, 2018 December 31, 2019 December 31, 2020 Inventory Determined by LIFO Method $0 100 200 350 FIFO Method $0 8 220 410 Cost of Goods Sold Determined by LIFO Method $0 800 940 1,100 FIFO Method $0 892 828 1,060
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Retained earnings reported under LIFO are as follows.
December 31, 2018
December 31, 2019
December 31, 2020
Other information:
1.
2.
Earnings, January 1, as reported
For each year presented, sales are $2,900 and operating expenses are $1,040.
Bramble provides two years of financial statements. Earnings per share information is not required.
Prepare comparative retained earnings statements for 2019 and 2020 under FIFO.
Retained Earnings Balance
$1,060
1,980
Earnings, January 1, as adjusted
ne /(Loss)
2,740
: Adjustment for Cumulative Effect of Applying New Acounting Method
Earnings, December 31
2019
$
2020
Quin
linn
Transcribed Image Text:Bramble Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Bramble had used the LIFO method
for financial reporting since its inception on January 1, 2018, and had maintained records adequate to apply the FIFO method
retrospectively. Bramble concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on
the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold.
Income taxes are ignored.
Date
January 1, 2018
December 31, 2018
December 31, 2019
December 31, 2020
Inventory Determined by
LIFO Method
$0
100
200
350
FIFO Method
$0
8
220
410
Cost of Goods Sold Determined by
LIFO Method
$0
800
940
1,100
FIFO Method
$0
892
828
1,060
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